Parliament, Friday, 1 March 2024 – The Auditor-General of South Africa (AG) appeared before the Portfolio Committee on Public Enterprises to brief the committee on the South African Airways’ (SAA) audit outcomes for the financial periods ending 31 March 2019, 31 March 2020, 31 March 2021, and 31 March 2022. SAA’s financial statements submitted for audit over those financial years each received a disclaimer due to material misstatements and limitations in obtaining sufficient and appropriate audit evidence. The AG outlined the financial difficulties and operational challenges facing the SAA, including the impact of the business rescue process, the injection of government funds, and the ongoing process of appointing a strategic equity partner. The audit outcomes show a regression from a qualified audit opinion to a disclaimer for the four years under review, mainly due to material misstatements in the financial statements, compliance issues, and weaknesses in the control environment. The AGSA told the committee that the lack of adequate record-keeping and the loss of finance staff during the business rescue process have contributed significantly to the material limitations of scope and have affected the credibility of the SAA’s financial statements. In addition, the instability at the SAA board and executive management level, as well as the lack of functional committees and an effective internal audit function, have also negatively impacted on governance at SAA. Compliance with applicable legislation has also been a challenge. The AG emphasised the need for a focus on stability, governance, compliance, and improving the control environment to ensure reliable financial reporting and effective oversight. The appointment of an interim board is a step towards enhancing transparency, accountability and oversight, but the resolution of the organisational structure and internal capacity is dependent on finalising the strategic equity partner transaction. The committee noted that the report presented by the AG highlighted the lack of preparedness for the ongoing strategic equity partner transaction, governance and stability issues, non-compliance with applicable legislation, material irregularities, and the need for improvement in the internal control environment. The committee also noted the recommendations provided by the AG that enhance and improve the airline’s financial and operational performance. The committee also highlighted action taken to address the root causes of the audit findings, such as poor record-keeping and the lack of consequence management, and detailed the plans for future financial management, including retraining and the implementation of new policies. The committee questioned the necessity of a strategic equity partner and said it is of the view that the SAA is viable and can operate independently. Selling the entity to the private sector is not the only available solution, the committee emphasised. ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE OF PUBLIC ENTERPRISES, MR KHAYA MAGAXA. For media enquiries or interviews with the Chairperson, please contact the committee’s Media Officer: Name: Yoliswa Landu Parliamentary Communication Services Cell: 081 497 4694 E-mail: ylandu@parliament.gov.za
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